MARC continues to maintain its AID rating on Antara Steel Mills Sdn Bhd’s (Antara) RM500 million Bai’ Bithaman Ajil Islamic Debt Securities (BAIDS) Programme on MARCWatch Negative pending the conclusion of our ongoing review of its rating for possible downgrade. The BaIDS was initially placed on MARCWatch Negative on February 3, 2009 to highlight concerns over the financial impact of an extended shutdown of Antara’s Labuan-based Hot Briquetted Iron (HBI) plant shutdown due to weak steel demand in the second half of 2008.

MARC has been informed by Antara that the HBI plant has since resumed operations in February 2009 with capacity presently running at 89%. Antara is expected to report an audited pre-tax loss arising from sharply reduced top-line revenue as well as large inventory impairment charges for financial year ended June 30, 2009. MARC expects to resolve the MARCWatch status of Antara’s rating by end October 2009 based on our assessment of the impact of Antara’s recent financial performance and steel industry outlook on Antara’s credit profile over the next several quarters. Should our assessment of Antara’s credit metrics lead to a rating downgrade, MARC believes that the magnitude would be limited to one notch.

Contacts: 
Ruben Khoo, 03-2090 2265/ rubenkhoo@marc.com.my;
Francis Xaviour Joe 03-2090 2279/ fxjoe@marc.com.my; Rajan Paramesran 03-2090 2233/ rajan@marc.com.my